NYU Langone Health’s Department of Orthopedic Surgery has been involved in bundled payment programs since 2013. Our experience with the challenges of this payment model has spurred us to develop recommendations for clinical leaders. We call these recommendations the Seven Pillars of Bundled Payment Success.

1. Identify and modify patient risk factors preoperatively

Under bundled payments, the hospital assumes financial risk for complications, especially those that lead to increased postacute charges. Orthopedic surgery leaders should spearhead the implementation of preoperative risk assessment tools to identify opportunities to reduce patients’ risk before surgery—for example, by helping patients control their diabetes or by treating pre-existing Staphylococcus aureus colonization. Risk identification can also enable providers to improve the economics of the episode by billing services under a more appropriate Diagnosis-Related Group (DRG).

2. Adopt evidenced-based clinical pathways

Orthopedic surgery leaders should promote efforts to standardize care to evidence-based best practices. This can help elevate the practice of low-volume providers, which will improve outcomes and costs for the entire department. For example, implementing evidence-based blood management protocols can help a department reduce transfusion-related complications and avoid the costs of unnecessary blood product use.

3. Establish a robust data collection and dissemination infrastructure

The federal government reconciles episode costs and payments retrospectively, often months after the services have been provided. To successfully manage an episode of care, providers must carefully track utilization and expenses in real time. Use hospital accounting and data systems to capture the cost of all aspects of care, including pre-admission testing, implants or any other materials used during the procedure, the inpatient stay, services provided during the 90 days after the hospital stay, and any stakeholder payments. Robust data collection enables hospitals to respond proactively to issues that could lead to a poor outcome and/or increase costs.

4. Identify variation in outcomes and costs

Cost and outcome variations across an institution are a prime opportunity for optimizing care episodes. Data often show no correlation between high costs and superior patient outcomes, and providers who are outliers in terms of episode costs can often be persuaded to adopt more efficient practice patterns. Variation analysis can also be used to identify and reduce unnecessary waste. Both efforts help hospitals control costs, an important discipline under bundled payments.

5. Maximize and demonstrate quality

The discussion about bundled payments often centers on cost control. However, it is critical to keep in mind that quality measures are also an essential component of these programs. CMS bundled payment programs use three principal quality measures—the hospital-level risk-standardized complication rate, Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey results, and patient-reported outcomes. To perform well under bundled payments, hospitals must work to optimize care quality and patient outcomes.

6. Control post-discharge care and costs

Under the Comprehensive Care for Joint Replacement and Surgical Hip and Femur Fracture Treatment (SHFFT) bundles, hospitals are responsible for costs incurred during the 90-day post-discharge period. In some cases, postacute care represents up to a third of total episode spending. Orthopedic surgery leaders need to collaborate with providers across the care continuum to control post-discharge costs. As discussed in Pillars 1 and 2, preoperative risk modification and evidence-based protocols are important tools for minimizing costs, including costs incurred after discharge as a result of complications.

7. Identify and align stakeholders

Successful bundled payment management requires the careful orchestration of physicians, nurses, ancillary staff, and postacute providers. Hospital administrators and orthopedic leaders must work to align all stakeholders on the mission and goals of the bundled payment program. Gainsharing arrangements are an effective way to align orthopedic surgeons with cost control and quality improvement priorities. In addition, interdisciplinary leadership teams are key to organizing clinical units to provide coordinated services across the episode of care.